New Delhi

China's services sector experienced an uptick in growth in March, with new business expanding at the fastest rate in three months, as indicated by a private-sector survey.

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According to a Reuters report, this development is indicative of a potential recovery in sentiment within the world's second-largest economy.

The Caixin/S&P Global services purchasing managers' index (PMI) increased to 52.7 from 52.5 in February, marking the 15th consecutive month above the 50-mark, which denotes expansion.

Improved underlying demand and initiatives to stimulate new orders contributed to the acceleration in the pace of new business expansion, reaching its highest level since December of the previous year.

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This surge in new business has also strengthened business confidence, while sub-index of future activity rose for the first time in three months.

There is optimism surrounding the potential impact of new product lines, expansion strategies, and increased client budgets on sales.

Despite the positive indicators in sales and business confidence, the growth in employment levels has experienced a setback.

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Employment in the services sector contracted for the second consecutive month in March, although the rate of job shedding eased compared to February.

Respondents said that resignations among staff and redundancies aimed at enhancing productivity as contributing factors to the decline in payroll numbers.

The upbeat performance of the services sector, along with favourable results from the Caixin manufacturing PMI, propelled the composite PMI to 52.7 last month, up from 52.5 in February.

This marks the highest reading since May 2023, suggesting an overall improvement in both manufacturing and services activities.

The growth in supply and demand, along with enhanced exports and sustained market optimism, contributed to this positive trend.

Reuters cited Wang Zhe, an economist at Caixin Insight Group, who commented on the survey results.

He noted that growth in both manufacturing and services sectors accelerated slightly.

Additionally, he highlighted improved exports and sustained market optimism as contributing factors.

However, Zhe also pointed out that employment levels continued to contract in both sectors, while input and output prices remained low, indicating persistent sluggish demand.

(With inputs from Reuters)